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Here are several prominent insurance schemes and fraud trends. Most of these
schemes persist year after year, though with some variations. Others, such as
diversion of prescription narcotics, have spread rapidly in the last several
years.

Home arsons

Some homeowners
facing foreclosure have been arrested for allegedly torching their homes,
hoping an insurance payout
will save their homes. The numbers appear relatively small and the trend
anecdotal compared to vehicle giveups. Still, cases continue to be reported
around the U.S.

Staged auto crashes

Drivers maneuver innocent motorists into
low-speed crashes, often making it seem the motorists are at fault. In many
cases, the con's car is packed with so-called passengers who are part of the
scam. The passengers claim they received painful (and fake) back and neck
injuries that require expensive treatment from a chiropractor or physical
therapist who's part of the scam. The shady medical provider files thousands of
dollars with the motorist's insurance company for useless or even phantom
treatment. Increasingly, the crashes never happen at allthe cash and ensuing
treatment are fabricated. The largest concentrations of staged accidents are in
urban areas. The high traffic volume makes large numbers of injury claims more
plausible and recruits for the scams are more-easily available.

Organized gangs: Organized gangs involving recruiters, car
"passengers," doctors, medical clinics, lawyers are involved in many of the
largest staged-accident crimes. The gangs lure motorists into crashes, crash
their own cars into each other, or invent "paper" accidents that never happened
in order to make large volumes of bogus injury claims. These rings are
widespread in several areas of the US, and often involve immigrants as
street-level operatives. Many states have passed laws and regulations targeting
staged-accident rings, and some have formed taskforces, hired special
prosecutors and deployed other resources to shutting down the rings.

Agent scams

Most insurance agents are honest and
ethical, but a growing number of agents are bilking their customers. Dishonest
agents steal their customers' premiums, but not buy the requested policies.
They cover up the thefts by issuing fake policies or other evidence of
coverage. Customers often discover the scam only when they make a claim and the
insurer says there's no coverage. Dishonest agents also will secretly slip
unwanted coverage into a policy to boost their own commissions. They may also
convince policyholders especially seniors to cash out their life policies and
buy a new policy with no accumulated value.

Diversion of prescription narcotics

Physicians,
pharmacists, doctor-shopping patients, drug traffickers and others are
diverting large volumes of addictive prescription drugs such as OxyContin and
Vicodin for street resale and personal use. The prescriptions typically are
billed to insurers. The prescriptions are forged, sometimes using fake patients
and stolen identities. Some swindles are done by individuals, and some by
organized rings. Diversion of narcotics coincides both with the emergence of
pain management as a medical specialty, and with an explosion of street demand
for addictive prescription painkillers, muscle relaxants and other addictive
prescription drugs. Aside from the stolen insurance money, drug diversion fuels
rising addiction and overdose deaths from prescription narcotics.

Auto premium evasion

Drivers fraudulently
reduce their auto premiums by registering their vehicles in another state or
county where premiums are lower. They may take out a P.O. box, or register
their vehicle at the address of a relative or friend, lying to their auto
insurer that this is their primary residence. This trend is especially notable
in several East Coast states such as North Carolina, Pennsylvania,
Massachusetts, New York, New Jersey, Florida and Maryland. Premium scams can
unfairly help raise premiums for drivers in the lower-priced locales. If New
York driver who's fraudulently registered in Pennsylvania has a crash in New
York, the insurer will calculate the crash into premiums for the state where
the vehicle was fraudulently registered. There are other forms of rate evasion,
such as failing to place a teen driver on your auto policy; using counterfeit
documents to obtain a driver license without buying auto coverage; and making a
minimum down payment to buy coverage and get vehicle registration, then
allowing the policy to cancel for nonpayment.

Body shop scams

Body shops are generally
honest, but some bilk their customers. They'll perform shoddy repairs, use old
or unsafe parts, further damage a car to inflate bills, and bill insurers for
work they never perform. This can leave drivers with vehicles that are unsafe,
and require considerable time and effort to re-fix the original repairs.

Owner vehicle giveups

Anxious to avoid
unwanted monthly payments, some owners will dump their vehicles then tell the
insurer that it has been stolen. Owners often will torch the vehicle in a
remote locale, or simply abandon it in the woods or a vacant lot. Sinking an
vehicle in a lake, canal or river is another approach. Vehicle owners might
dump their vehicle when they suffer financial setbacks such as a job loss,
weakening economy or spike in gas prices. Long-term car loans also provide an
incentive for people to dump their cars because after a few years the balance
on the loan is more than the value of the car.

Fake hate scams

Home or business owners will
torch their dwellings or stage a burglary for insurance money, but disguise the
crime as a racial, religious or other hate crime. They might spray-paint racial
insults on the interior walls, for example. Initially, the crimes often
generate outpourings of community support and sympathy for the apparent
victims, with considerable news coverage.

Senior fraud

Seniors are frequent targets of insurance swindles. Seniors often have built
up substantial assets to exploit. Many con artists also perceive seniors as
overly trusting, inattentive to details and easily confused.

Insurance Agents. Dishonest agents steal seniors'
premiums without buying coverage... or convince them to cash out life policies
with years of accumulated value so the agents can earn a large commission by
selling a new policy they don't need... or slip unwanted costs into a
policy.

Staged accidents. Seniors are targeted by staged accident
gangs that perceive seniors as inattentive drivers and easily confused at the
accident scene.

Medicare discounts. The new Medicare discount
prescription program already is experiencing sale of fake Medicare cards and
related scams.

Health fraud. Dishonest doctors and other medical
providers inflate claims for routine treatment, bill insurers for treatments
that never happened, and perform often-dangerous and invasive surgeries on
seniors who don't need the treatment. Aside from the danger to their health,
excessive claims can max out seniors' coverage limits. This could deprive
seniors of coverage when they most need it.

Airbag
fraud

After an accident, dishonest body shops will replace deployed airbags
with beer cans, rags, old sneakers, cheap gray-market bags, or bags that are
incompatible with you're the damaged car. The body shop then charges the
insurer several thousand dollars for a new airbag, leaving drivers without
life-saving airbag protection when they're back on the road. Drivers have died
when they crashed after body shops had failed to install new airbags. Used and
rebuilt cars are especially prone to airbag swindles.

Tainted-food shakedowns

People try to extort
insurance settlements from businesses by planting dead mice or other objects in
their food, then claiming it was the firm's negligence. One woman planted a
dead mouse in her chili at a Cracker Barrel restaurant in Newport News, Va. She
sought a large settlement, but lab analysis showed the mouse hadn't been cooked
in the chili, and probably died in a mousetrap at the swindler's home.

Fake slip-and-fall injuries

Swindlers pretend
to fall and be injured to extract insurance money from a business. They might
drop grapes or lettuce leaves on the floor of a produce section in a grocery
store, then say they were injured after slipping on the material. Another ruse
is to pretend to fall on an uneven sidewalk or in a parking lot.

Scams by Professional Employer Organizations
(PEOs)

Most PEOs are reputable; they provide insurance, accounting and
other services for business clients. But crooked PEOs steal client workers
compensation, liability or health premiums without buying the coverage. They
may issue fake insurance policies or other documents to create the illusion of
coverage. Some PEOs are complete fakes; they're fronts to convince unsuspecting
businesses to buy nonexistent coverage and other services.

Fake business liability coverage

Smaller
businesses in risky activities such as longhaul trucking and pesticides
sometimes are sold bogus liability coverage. The swindlers exploit the owners'
anxiety over high premiums and frequent lack of sophistication in insurance
matters.

Dental fraud

Dishonest dentists will pull
teeth, do root canals and drill cavities for people with perfectly healthy
teeth. These dentists hike their own insurance billings by charging insurers
for painful, unneeded and invasive surgeries that often are botched and require
more surgery to correct. Sometimes dentists charge insurers and government
health programs for surgery and other treatments they never performed. They may
also inflate bills by disguising routine procedures such as tooth polishing as
more elaborate and expensive work. Dentists also are increasingly involved in
drug diversion schemes.

Medicare discount prescriptions

Medicare's
discount prescription Plan D has seen early signs of fraud. Con artists
pretending to represent Medicare have sold fake Medicare cards door to door,
even though the program doesn't allow door-to-door sales. Crooks also have
tried to exploit those sales to convince seniors into revealing personal
financial information that could be used for identity theft and other swindles.